The team at NEL Fund Managers has invested in its own future by forming an Employee Ownership Trust.

Based around the John Lewis partnership model, Employee Ownership Trusts (EOTs) were created in 2012 to provide a means of encouraging employee engagement within businesses and giving them an active interest in their company’s performance.

Now, just like the John Lewis employees, the 11-strong team at the Newcastle-based regional fund managers will have a say in the running of the business – and will provide the team with a greater degree of control over the direction of the business, as well as a share of benefits from its performance.

The NEL Fund Managers EOT is part of a relatively small club of employee-owned companies in the UK formed since they were introduced four years ago, but the Employee Ownership Association says numbers are on the rise, at an annual rate of just under 10% to 300 in 2015, and productivity in the businesses is also on the up as a result.

The formation of the NEL Employee Ownership Trust was carried out with support from the Newcastle offices of Deloitte and law firm Ward Hadaway.

Yvonne Gale, chief executive at NEL Fund Managers, said: “The positive benefits of employees having a direct interest in the businesses for which they work has long been recognised, and going down this road takes us to the start of an exciting new chapter in NEL’s ongoing story.

“We have an extremely strong and dedicated team who have helped hundreds of North East businesses achieve their own sustainable commercial success over the years, and we are now in a stronger position to shape our own future development strategy.

“Demand for the type of mezzanine funding we provide remains extremely strong as ever, and the recent £4m extension to the Growth Fund has added new momentum to our search for even more North East businesses with strong management teams and robust development plans in which we can invest.”

Gordon Rowell, senior tax manager at Deloitte, added: “In our initial discussions with the directors of NEL, the employee-focused culture of their business was clear, as was the fact that this was not a typical management buyout situation.

“The EOT structure appeared to fit perfectly with their long term aims and approval from HMRC was obtained to provide certainty that it met the requirements of the legislation.”

She said: “This type of innovative company structure is really breaking new ground when it comes to giving staff a greater stake in a company’s fortunes.

“We were very pleased to be able to advise NEL Fund Managers on the formation of its Employee Ownership Trust, and we wish Yvonne and the team continued success under the new arrangements.”

Originally founded in 1989, NEL Fund Managers is currently responsible for the management of the Finance For Business North East Growth Fund, and has made investments in well over 100 regional businesses with a total value of more than £25m over the last six years.

A £4m extension to the Growth Fund was announced recently, and NEL is now looking to make up to 15 further investments in the coming year of between £50,000 and £400,000 in businesses right across the North East that require new capital to implement their development plans.